Strategic vulnerabilities of emerging market MNCs – How litigation experiences in weak patent systems increase the risks of patent litigation abroad

Abstract

Threats from patent litigations are a major roadblock for the internationalization strategies of MNCs from emerging markets (EMNCs). While existing theory focuses on weak patent systems in emerging economies as an obstacle for multinational corporations from developed economies, we conceptualize them as experiential learning contexts that shape the patent litigation routines of local firms. We reason that the depth of organizational learning from patent litigation experiences as defendants in weak, domestic patent systems is counterproductive for EMNCs. Such experiences lead to the development of patent litigation routines that are ill-suited for operating in countries with strong patent systems, thereby exposing EMNCs to costly patent litigations. We find empirical support by analyzing 2,273 Indian firms between 2007 and 2017. Learning from operating in many countries with strong patent systems and experience with international, as opposed to national, patent filings create boundary conditions.